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Orthopedists, Lawsuits, and a Reporter Who Doesn’t Quite Understand

February 12, 2012

On a health watch website a reporter wrote a story about a national survey of orthopedists and their malpractice concerns. To no one’s surprise, the orthopods said they order tests to protect themselves from being sued later, a practice known as defensive medicine.

96% of the respondents said they ordered scans, lab tests, other ologist referrals, or hospital admissions mainly to avoid possible malpractice claims. The researchers tallied the cost of these behaviors and estimated that they cost $102,000 per orthopedist per year, for a total across the U.S. of $2 billion per year.

Commenting on these survey results, the reporter wrote “…nearly all orthopedic surgeons may order unnecessary tests, referrals or hospitalizations …”, and later that these doctors were “…adding no benefits to patient care.”   These are incorrect statements.

For a doctor to order a test to try to prevent a lawsuit doesn’t mean the test has no benefit or is completely unnecessary, but instead has rare benefit. This is a hugely important distinction that I believe the media and the business world does not understand, including insurance company bean counters, health policy advocates, physician critics, politicians, Medicare bureaucrats, etc.

A patient who has what looks like a garden variety sprain rarely has a severe fracture. A patient who has garden variety shoulder pain rarely has a tumor hidden in the joint. A patient who hit his head, but otherwise seems perfectly fine, rarely has a neck fracture. In our medico-legal culture that assumes early detection cures everything, any patient in these scenarios who has less than a perfect outcome when the rare disease is discovered can sue the doctor for delayed diagnosis and improper treatment, and money will usually change hands.

To a business person, factoring in a few percentage points of revenue loss each year is just the cost of doing business. A credit card company takes 3% of the merchant’s revenue, but the alternative option of cash-only transactions finds that employees will steal or mismanage a few percent of the revenue also, and is very inconvenient to customers. Wal-Mart expects a certain number of slip and fall lawsuits each year. It can implement policies in its stores to reduce the risk, but the risk can never be eliminated. The cost of risk-avoidance strategies are limited by the expected amount of lawsuit risk reduction. This is why Wal-Mart stores don’t hire ten employees at a time to constantly run around the store with towels, vigilant for wet spots and other fall hazards. The cost of this risk mitigation is greater than the cost of the risk.

For the business world, this issue of risk is only about money. For doctors, it’s personal and strikes at the core of their professional existence. When a patient who didn’t receive a scan at the first opportunity later is found to have the rare bad outcome, he likely will be angry at the doctor (sometimes for good reason if the doctor communicates poorly), and will often be faced with a lot of future medical expenses. So he sues the doctor, effectively saying, “You are a horrible doctor who caused me to be permanently injured or die because of your lousy care.” The emotional assault on the doctor is much worse than any financial implications.

Now the doctor is faced with depositions, accusations, letter after package after letter of legal minutiae, and lawyer meetings. A black cloud will hang over his head for 4-5 years waiting for the legal process to play out. And if the doctor agrees to a small settlement just to make the case go away, he must relive the pain with every hospital privilege request and insurance company application for the rest of his career.

This phenomenon explains why America continues to wrestle with more expensive medical malpractice costs and defensive medicine costs than the rest of the world. The doctor-patient relationship in the U.S. is that physicians are expected to offer every possible service, no matter how rare the benefit or expensive the service. Until this relationship changes, the cost curve will never be bent my more than a few trivial percentage points, and the U.S. will continue to support a healthcare system that costs 50% to 100% more than the rest of the developed world.

What health risk is too low to pursue with tests and treatments? What cost is too great to spend on a rarely beneficial outcome or small health improvement? The answers to these two questions are the key to stopping the healthcare industry from sucking resources from the rest of the economy and bringing U.S. healthcare costs in line with the rest of the world.

Rare benefit vs. no benefit. It makes all the difference in the world.

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